Unemployment benefits extension

Treasury Secretary Steve Mnuchin said on Fox News, “It wouldn’t be fair to use taxpayer dollars to pay more people to sit home than they would get working ...” The Washington Post noted that “Part of the problem stems from a push by administration officials and GOP lawmakers to reduce a $600 weekly payment of enhanced federal unemployment benefits.”

$600 for a forty hour week amounts to $15/hour; for fifty weeks of work it comes to an annual income $30,000. Curiously enough, $15/hour has been cited as a living wage. So why would anyone seek out a minimum wage job if you can get twice as much doing nothing? 

At present, the federal minimum wage is $7.25/hour and 20 states hew to this standard for jobs falling under the Fair Labor Standards Act. Ten of these are states in the old Confederacy. The District of Columbia is the only jurisdiction with a $15.00 minimum wage; others are headed that way in the future. California comes in at $13.00 followed by Massachusetts at $12.75.

Here’s and idea. If you want to erase the disincentive to find a job, why not peg federal unemployment benefits to the minimum wage in each state for forty hours of work. That way unemployed workers in DC get $600/week, Californian get $520/week and the unemployed in the twenty minimum wage states get $290 each week. There is no incentive not to take a minimum wage job. 

The virtue on this plan - painful as it is - is that it demonstrates the difference between a living wage and a minimum wage and how each affects  individuals, families and the local economy. 

Another idea would be to supplement minimum wage jobs with cash payments that brings work income to a basic living wage amount. This would be a step toward a guaranteed basic income for all Americans.